State Subsidies For Babis’s Agrofert Are Extreme Conflict Of Interest

Prague, July 26 (CTK) – The fact that most of the political power in the country is in the hands of Andrej Babis (ANO) whose Agrofert gains hundreds of millions of crowns in state subsidies is a major problem of the Czech Republic, Ludek Vainert writes in daily Hospodarske noviny (HN) today.

HN writes today that Agrofert won 2.1 billion crowns in subsidies last year, which is almost three times more than it paid in taxes.

Vainert says Babis has been in an extreme conflict of interest at least from January 2014 when he was appointed finance minister.

But after he was appointed prime minister and after he selected people who are either his puppets or have the same interests as Agrofert for key posts in the country, the problem has become far more serious, although the Czech public got used to the situation.

The fact that Babis transferred Agrofert, his huge agricultural, chemical, food and media holding, to two trust funds in February 2017 in order to formally comply with a new conflict of interests hardly changed anything, Vainert writes.

Babis calls Agrofert his former company, but he continues to be a billionaire. Each subsidy drawn by Agrofert actually goes into his own pocket, he writes.

If Babis left the government, he might head Agrofert once again. He might head Agrofert even in the current situation if he changed a part of the conflict of interest law, with support from parties that are ready to help him. However, Babis has no reason to do such a thing because his conflict of interest in fact does not limit him in any way.

The present law on conflict of interest is a result of the stalemate after the elections held in 2013. The victorious Social Democrats (CSSD) could not imagine any other government than their alliance with the ANO movement, a newcomer to parliament then.

As everybody was astonished by the huge property Babis owned and his newly acquired media empire, nobody seriously proposed a real separation of his property similar to the American blind trusts, Vainert writes.

To achieve a situation where Babis would not have any information on what the holding owned in order to prevent him from influencing the profits his property made, Agrofert should have been sold already then.

But Babis’s political rivals and allies wanted to maintain the reputation of the Czech Republic as a country that keeps an eye on conflict of interest. At the same time, they needed Babis to be able to rule the country and they could not imagine a sale of so huge property. The transaction would be similar to the biggest deals that PPF group owner Petr Kellner made in the Czech Republic.

Czech “traditional politicians” thus lacked courage to demand a real elimination of the conflict of interest. Moreover, they did not believe that the billionaire Babis, strongly backed by President Milos Zeman, would let himself be limited by rules that are applied in the United States.

The outcome of the compromise law is that Babis keeps control over his media, which do useful and sometimes rather dirty work for him (this was apparent before elections), that almost everybody knows it and nobody is surprised about it anymore, Vainert writes.

From the perspective of Agrofert and its beneficiary, the situation may only get better.

For example, Miroslav Toman, a man close to Zeman, is in charge of the Agriculture Ministry now. Toman has been known for lobbying for higher subsidies for big agricultural firms for years, which is something Babis is going to profit from.

If the administrator of the trust funds sold Agrofert and invested the money to make profit for Babis in a way that Babis would not know where the money was invested, Babis’s critics could not claim that he keeps pushing through advantages for his firms anymore.

The Prague-Brussels dispute over subsidies for big agricultural groups would look different since Babis would be fighting for the interests of his country rather than for his own interests, Vainert writes.